All posts tagged Gleacher & Co.

Gleacher & Co. said it will exit fixed income trading, its biggest business, as it continues to fight for survival amid a proxy fight for control of its board.

In a statement Wednesday, the embattled firm said it is talking with an unnamed third party about a possible business combination. Activist hedge fund Clinton Group has proposed a slate of director nominees, including Gleacher’s chief executive officer, Thomas J. Hughes, to be voted on at the annual shareholder meeting in May.

The Clinton Group slate competes with one proposed in February by Gleacher’s biggest outside shareholder, the private equity firm MatlinPatterson Global Advisers, a slate that cuts out Hughes.

Gleacher & Co., the embattled advisory and trading firm that has struggled with internal turmoil as it seeks a buyer, is setting up for a proxy battle later this spring.

The activist hedge fund Clinton Group Inc. plans to nominate its own slate of directors to compete with a slate put forward in February by Gleacher’s biggest shareholder, the private equity firm MatlinPatterson Global Advisers.

On Tuesday, Gleacher announced it had received a letter from Clinton Group asking that it reopen the period during which shareholders can submit proposals for director nominations, a window that closed Feb. 23. Gleacher said it extended the nomination deadline until 5 p.m. April 8.

Clinton Group, run by George Hall, owns 272,490 shares of Gleacher, less than 1% of the outstanding stock. According to FactSet, the position was new as of Dec. 31.

Greg Taxin, a managing director at Clinton, said the firm decided to approach Gleacher because “we thought it was important to allow shareholders a choice to the MatlinPatterson plan, and what we believe to be a viable and good choice.” Taxin wouldn’t comment on what Clinton planned to propose.

Gleacher & Co. disclosed in a securities filing late Monday that it had recently experienced “several adverse events” that resulted in a “serious decline” in its financial results.

In its annual filing with the Securities and Exchange Commission, the advisory and trading firm said, “We have experienced a significant decline in revenue in the first quarter of 2013, and we cannot predict when or if we will be able to reduce or reverse this decline and associated losses.”

Gleacher said in the filing that in order to address the issues, it is “seeking, and may continue to seek, a strategic transaction with a third party that could result, for example, in an acquisition of the company or sale of substantially all of our assets.”

“A number of our trading customers have reduced or suspended trading activities with us,” Gleacher said Monday. “At least in part because of the perceived instability of our business, new investment banking mandates have dwindled.”

The company added the events have weakened employee morale, which could lead to additional resignations.

Dow Jones Newswires reported last month that Gleacher had received a $250 million buyout offer from the St. Louis brokerage firm Stifel Financial Corp. last June but those deal talks never progressed.

Meanwhile, Gleacher has had to contend with operating losses as it searched for strategic alternatives. A formal review ended in February with no deal to sell itself. Gleacher has also had heavy staff defections and now has 220 employees.

Stifel Financial for the past decade has seemed to believe in manifest destiny — scooping up middle-market investment banking assets from coast-to-cost.

And its expansionist dreams seem to be growing.

Last November, Stifel agreed to its largest-ever acquisition, grabbing New York’s KBW Inc. but didn’t even stop long to digest that. By the end of the year it finished buying what it didn’t own of the restructuring bank Miller Buckfire and now WSJ has reported on two deals this week its been attempting to make.

Gleacher’s board turned down Stifel and decided to take the bank off the block. Still the offer, as well as Stifel’s other recent deals, highlights its decade and a half strategy of acquisitions.

Since Chairman and CEO Ronald Kruszewski joined in 1997, Stifel has made 16 purchases, the first in 1999, according to data provider Dealogic. Across that same time it has seen its headcount grow seven-fold, its revenue by 800% and its profit by 26 times.

One of the storied names in the M&A world is leaving the firm that bears his name.

Bloomberg News

Eric Gleacher is resigning as chairman of Gleacher & Co., the boutique investment bank said Tuesday morning. He said in a statement that he had “decided that it was time for me to focus my attention and energy on some exciting business opportunities outside of the firm.”

Gleacher & Co. last August launched a strategic review that included the possibility of selling itself, hiring Credit Suisse to help with the process. It was also looking at making acquisitions or selling certain assets, among other solutions.

Gleacher, originally formed in 1990 as a boutique merger-advisory firm, has been recasting itself into a firm that advises middle-market companies, especially in the real-estate, financial-services and aerospace sectors, on deals and capital-market strategies.

Mr. Gleacher was a star M&A adviser in the 1980s, starting the business at Lehman Brothers in 1978 and heading the business at Morgan Stanley from 1985 to 1990, when he left to start his own firm. At Morgan Stanley he was the adviser to KKR on its storied fight to acquire RJR Nabisco Inc., the fight that became “Barbarians at the Gate.”

He has stepped back from the every-day operations of his eponymous firm, WSJ reported in August, and CEO Thomas Hughes has expanded the operations further past M&A. Hughes said Tuesday that “we will continue to grow our M&A and capital raising capabilities in line with the vision we have described previously, a vision that Eric helped author.”

Gleacher & Co.’s two-month strategic review is coming to a head, but the potential for a sizable premium may be complicating a deal to potentially sell the company, said people familiar with the matter.

As it goes from adviser to advisee, troubled boutique investment bank Gleacher & Co. could soon be history.

Bloomberg News

Eric J. Gleacher

Gleacher, founded by 1980s Wall Street deal-maker Eric Gleacher, has been hit hard by the slowdown in M&A activity and falling trading volumes. As the WSJ reported Thursday, the firm is exploring strategic options including a sale, hiring Credit Suisse as an adviser. Analysts at JMP Securities think a sale is a likely outcome.

For one, the private-equity firm MatlinPatterson Global Advisors owns about 28% of its shares and holds two board seats. The firm could exert pressure on Gleacher to sell, says JMP. MatlinPatterson cashed out on part of its investment in 2009, and exiting its remaining investment through a sale could still allow it to eke out a small gain.

About Deal Journal

Deal Journal is an up-to-the-minute take on the deals and deal makers that shape the landscape of Wall Street, including mergers and acquisitions, capital-raising, private equity and bankruptcy. In short, wherever money changes hands. Deal Journal is updated throughout each trading day with exclusive commentary, analysis, data, news flashes and profiles. The Wall Street Journal’s David Benoit is the lead writer, with contributions from other Journal reporters and editors. Send news items, comments and questions to deals@wsj.com.

Dealpolitik is Ronald Barusch's strategic look at deals currently making the headlines as well as the major forces at work in the deal-making world. He was a M&A lawyer with Skadden, Arps, Slate, Meagher & Flom for over 30 years. He retired in 2010 after 25 years as a partner at the firm. Click here for his current and archived columns.